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Snapchat May Have Hit Demographic Ceiling: Report

With the highly anticipated Snap, Inc. initial public offering (IPO) set to raise about $3.2 billion on March 1 by pricing shares at the high end of their expected range, a new report reveals that young social media consumers prefer Instagram, and millennial parents ages 45-to-54 are Snapchat’s only growth demographic.

The closely-watched eMarketer semi-annual social media user update, which has a disproportionate impact on consumer brands’ marketing budgets, estimated that Snapchat usage only rose by 14.2 percent in 2016, and projects user growth will slow through 2021.

Snapchat user projections for the prized 24-and-younger “Generation Z” demographic were downgraded by eMarketer due to competition heating up from rival Instagram. The only user demographic that is growing quickly is older Americans, who rose from 4.2 percent of users in 2015 to 6.4 percent at the end of 2016.

Brand marketers want to build positive awareness with the youth demographic, which is already the largest in the United States at 25.9 percent of the nation’s population, and generates $44 billion in U.S. economic activity. By 2020, Generation Z is projected to account for one-third of the U.S. population, according to Mashable.

Compared to their older, coach potato, siblings, “Gen Z” is perceived to have high entrepreneurial aspirations, with 72 percent of current high schoolers wanting to own their own businesses and 76 percent hoping they can turn their hobbies into full-time jobs.

Because advertisers have assumed that youth adore Snapchat, the company saw its advertising revenue skyrocket over six-fold, from $59 million in 2015 to $405 million in 2016, according to Securities and Exchange Commission financial disclosures.

Prior to the eMarketer report, which is based on expectations that Snapchat would continue to take Gen Z youth market share from all other social media platforms, AdWeek projected that the company would grow advertising revenues by 151 percent to $936 million in 2017.

Snap, Inc. is based in the Los Angeles beachfront community of Venice.

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